According to the latest NAIOP Industrial Space Demand Forecast, released today, nationally, the industrial real estate market is showing signs of slowing following a period of unprecedented expansion.
“Amid lower pressure on global supply chains, increasing inventory carrying costs, a cooling economy, and a decrease in the rate of e-commerce expansion, retailers and logistics firms have slowed the rate at which they acquired additional industrial space this year. Net absorption of industrial space in the first two quarters of 2022 was 151.2 million square feet, down sharply from 2021’s record pace but still notably higher than in prior years.”
The NAIOP Industrial Space Demand Forecast
The report projects that the still-hot industrial market will cool and the net absorption rate will continue to decline until it returns to the pre-pandemic trend. The total net absorption of industrial space in the second half of 2022 is forecast to be 112.4 million square feet, and full-year absorption in 2023 is forecast to be 209.4 million square feet.
The report’s authors: Hany Guirguis, PhD, professor, economics and finance, Manhattan College; and Michael J. Seiler, DBA, J.E. Zollinger professor of real estate & finance, College of William & Mary, cited several factors contributing to the forecast:
“On balance, there may be a leveling off in the industrial real estate sector that is a healthy rebalancing of where things should be when viewed through a long-term historical perspective,” said NAIOP President and CEO Marc Selvitelli, CAE. “The sector saw unprecedented growth that had been accelerated by the pandemic and related supply chain issues. As those two situations unwind, we will see a more natural course of growth.”
Download the full NAIOP Industrial Space Demand Forecast HERE
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